On Friday morning Jos. A. Bank Clothiers dropped its bid for Men’s Wearhouse—at least for now—and Eminence Capital wasted no time in turning the heat up on Men’s Wearhouse to force a sale.

As Jos. A. Bank said it would earlier this month, it pulled its $48 per share bid for Men’s Wearhouse since Men’s Wearhouse continued to rebuff it. Jos. A. Bank said it might consider a new proposal if Men’s Wearhouse invited one or “if circumstances were otherwise to change.”

Circumstances changed almost immediately with a surprise and aggressive move by Eminence Capital to pressure the Men’s Wearhouse board to consider a sale. Eminence announced last week that it owned 9.8% of the shares and wanted Men’s Wearhouse to solicit competing acquisition proposals, consider a leveraged recapitalization and enter into a dialogue with Jos. A. Bank.

Eminence’s strategy is an incremental one which ultimately could lead to an attempt to replace some or all of the directors of Men’s Wearhouse. The first step it took Friday was to seek to change the by-laws of Men’s Wearhouse, which is a Texas corporation.

Under the current by-laws of Men’s Wearhouse, directors stand for election at each annual meeting and can only be removed in the interim for “cause,” a standard that is almost impossible to meet in a fight over control. The 2013 annual meeting was held in September. Eminence proposes to call a special meeting at which the by-laws would be amended to permit shareholders to remove directors “with or without cause” by a majority vote of the shareholders.

Reuters

The move is likely not a total surprise to Men’s Wearhouse since when it snubbed the Jos. A. Bank offer it amended its by-laws to increase the vote required to amend the by-laws to require a two-thirds vote of the shareholders instead of just a majority – making it harder for Eminence to get the vote it needs.

Eminence is not yet proposing any changes to the board, but just changing the by-laws to permit it or another shareholder to seek such a change. It is a clever move because the amendment sounds shareholder-friendly (allowing the shareholders to change the board in a future vote) and avoids at this stage a war over which director nominees would be better for the company. Nevertheless, if Eminence wins the fight over the by-laws, the shareholders will be sending a strong message to the Men’s Wearhouse board.

Calling a special meeting of shareholders requires action by holders of 10% of the outstanding shares. Eminence owns just 9.8% of the shares. Since Men’s Wearhouse adopted a poison pill to effectively limit ownership to under 10%, Eminence must first solicit other shareholders to get to the 10% level required. Since only 0.2% of the shares are required to join in the call, it seems likely Eminence will succeed in this first step. Eminence has said it wants the special meeting held on Feb. 14, 2014, although has reserved the right to change its requested date.

Because Eminence is not seeking control or even board representation at this stage, and the Eminence proposal seems so shareholder-friendly, Men’s Wearhouse will have to decide whether it wants to fight the by-law amendment proposal. It would have a leg up in doing so–requiring support of only one-third of the shares– because of the by-law amendment the Men’s Wearhouse put in place last month requiring two-thirds of the outstanding shares to approve a further amendment.

However, the question the board needs to consider is whether, if Eminence succeeds in accomplishing the by-law amendment after a fight, it would it be that much easier for it to win board seats in the next step. A better move for Men’s Wearhouse rather than engaging in an all-out war over a shareholder-friendly by-law might be to keep its powder dry for now and instead commence its own review of strategic options for the company so the current directors can look a bit more shareholder-friendly themselves.

The Eminence effort is probably good news for Jos. A. Bank, which could have started down the by-law change itself but chose not to. But even if Eminence succeeds in getting the Men’s Wearhouse board to open up to looking at sale or Eminence goes all the way to replace the board, expect the Men’s Wearhouse directors—whoever they are– to squeeze Jos. A. Bank for as much value as possible. In any event, the Emminence move isn’t going to change the Men’s Wearhouse attitude towards Jos. A. Bank overnight and by the time Eminence ramps up its game Jos. A. Banks may have moved on to greener pastures.